ACT INSURANCE AUTHORITY
Purpose
The objectives of the ACT Insurance Authority (the Authority) are to:  carry out the business of insurer of Territory risks; take out insurance of Territory risks with other entities; satisfy or settle claims in relation to Territory risks; take action, with the Treasurer’s approval, for realising, enforcing, assigning or extinguishing rights against third parties arising out of or in relation to its business; develop and promote good practices for the management of Territory risks; give advice to the Treasurer about insurance and the management of Territory risks; carry out the role of the Nominal Defendant of the ACT; and administer, on behalf of and under agreement with the Chief Minister’s Directorate, the Default Insurance Fund.
2011‑12 Priorities
Strategic and operational issues to be pursued in 2011‑12 include:
•	implementing a program of reinsurance to protect the Territory budget based on an appropriate balance between risk transferred and risk retained;
•	implementing a revised ACT Government Risk Management Policy based on ISO  31000:   2009 – Risk Management and industry best practice;
•	developing an enhanced program of general and targeted risk management training programmes for Territory agencies;
•	conducting regular reviews of existing claims to ensure that appropriate management is being applied and that realistic claim estimates are included in financial statements;
•	completing a review of the Territory’s insurance program required to comply with amended arrangements under the Natural Disasters Recovery and Relief Arrangements (NDRRA); and
•	facilitating agency access to the claims reporting and data analysis to support the risk managed approach to operational and asset management.
Estimated Employment Level
2009‑10
Actual Outcome		2010-11
Budget
	2010-11
Est.  Outcome	2011-12
Budget
	
14	Staffing (FTE) 	14	14	14	

Changes to Appropriation
Changes to Appropriation - Controlled						
 	2010-11	2011-12	2012-13	2013-14	2014-15	
Capital Injections	Est. Out.	Budget	Estimate	Estimate	Estimate	
 	$'000	$'000	$'000	$'000	$'000	
						
Budget	10,000	 - 	 - 	 - 	 - 	
						
Saving - Capital Injection - Return to Government	(10,000)	- 	- 	- 	- 	
						
2011-12 Budget	 - 	 - 	 - 	 - 	 - 	

ACT Insurance Authority
Operating Statement
  2010-11			  2010-11	   2011-12		  2012-13	    2013-14	  2014-15		
    Budget			Est.Outcome	   Budget	     Var	  Estimate	    Estimate	  Estimate		
    $'000			    $'000	   $'000	      %	    $'000	     $'000	   $'000		
		Income								
		Revenue								
50,163		User Charges - ACT Government	50,124	53,735	7	57,765	62,097	66,755		
12,129		Interest	14,648	15,493	6	16,808	18,135	19,579		
2,893		Other Revenue	7,869	3,133	-60	2,639	2,739	2,726		
65,185		Total Revenue	72,641	72,361	..	77,212	82,971	89,060		
		Gains								
0		Total Gains	0	0	-	0	0	0		
65,185		Total Income	72,641	72,361	..	77,212	82,971	89,060		
		Expenses								
1,395		Employee Expenses	1,462	1,545	6	1,574	1,592	1,593		
248		Superannuation Expenses	253	244	-4	248	249	248		
1,454		Supplies and Services	1,411	1,445	2	1,275	1,303	1,335		
64,692		Other Expenses	67,347	66,754	-1	74,786	79,561	84,993		
67,789		Total Ordinary Expenses	70,473	69,988	-1	77,883	82,705	88,169		
-2,604		Operating Result	2,168	2,373	9	-671	266	891		
-2,604		Total Comprehensive Income	2,168	2,373	9	-671	266	891		

ACT Insurance Authority
Balance Sheet 
    Budget			Est.Outcome	    Planned		   Planned	   Planned	   Planned		
as at 30/6/11			as at 30/6/11	as at 30/6/12	   Var	as at 30/6/13	as at 30/6/14	as at 30/6/15		
   $'000			   $'000	     $'000	    %	    $'000	    $'000	    $'000		
		Current Assets								
252,054		Cash and Cash Equivalents	240,079	259,678	8	286,240	315,717	368,246		
4,702		Receivables	9,404	7,634	-19	5,633	5,148	5,127		
86		Other	684	684	-	684	684	684		
256,842		Total Current Assets	250,167	267,996	7	292,557	321,549	374,057		
		Non Current Assets								
137,236		Receivables	69,538	69,462	..	69,064	68,159	67,714		
53,294		Investments	56,950	54,443	-4	51,936	49,429	46,922		
140		Other	468	468	-	468	468	468		
190,670		Total Non Current Assets	126,956	124,373	-2	121,468	118,056	115,104		
447,512		TOTAL ASSETS	377,123	392,369	4	414,025	439,605	489,161		
		Current Liabilities								
42,406		Payables	48,551	59,775	23	70,774	76,785	82,796		
263		Employee Benefits	415	420	1	420	420	420		
87		Other	684	684	-	684	684	684		
42,756		Total Current Liabilities	49,650	60,879	23	71,878	77,889	83,900		
		Non Current Liabilities								
383,907		Payables	323,838	325,482	1	336,809	356,112	398,766		
192		Employee Benefits	41	41	-	42	42	42		
384,099		Total Non Current Liabilities	323,879	325,523	1	336,851	356,154	398,808		
426,855		TOTAL LIABILITIES	373,529	386,402	3	408,729	434,043	482,708		
20,657		NET ASSETS	3,594	5,967	66	5,296	5,562	6,453		
		REPRESENTED BY FUNDS EMPLOYED								
20,657		Accumulated Funds	3,594	5,967	66	5,296	5,562	6,453		
20,657		TOTAL FUNDS EMPLOYED	3,594	5,967	66	5,296	5,562	6,453		

ACT Insurance Authority
Cash Flow Statement
   2010-11			  2010-11	   2011-12		  2012-13	    2013-14	  2014-15		
    Budget			Est.Outcome	   Budget	     Var	  Estimate	    Estimate	  Estimate		
    $'000			    $'000	   $'000	      %	    $'000	     $'000	   $'000		
		CASH FLOWS FROM OPERATING ACTIVITIES								
		Receipts								
50,163		User Charges	50,124	53,735	7	57,765	62,097	66,755		
12,129		Interest Received	14,648	15,493	6	16,808	18,135	19,579		
47,149		Other Revenue	63,618	65,540	3	65,770	64,319	63,427		
109,441		Operating Receipts	128,390	134,768	5	140,343	144,551	149,761		
		Payments								
1,390		Related to Employees	1,450	1,540	6	1,574	1,592	1,593		
248		Related to Superannuation	253	244	-4	247	249	248		
1,446		Related to Supplies and Services	1,403	1,438	2	1,268	1,296	1,328		
72,277		Other	90,799	108,034	19	106,824	108,070	90,150		
75,361		Operating Payments	93,905	111,256	18	109,913	111,207	93,319		
34,080		NET CASH INFLOW/ (OUTFLOW) FROM OPERATING ACTIVITIES	34,485	23,512	-32	30,430	33,344	56,442		
		CASH FLOWS FROM INVESTING ACTIVITIES								
		Receipts								
911		Proceeds from Sale/Maturities of Investments	911	911	-	911	911	911		
911		Investing Receipts	911	911	-	911	911	911		
		Payments								
4,866		Purchase of Investments	4,826	4,824	..	4,779	4,778	4,824		
4,866		Investing Payments	4,826	4,824	..	4,779	4,778	4,824		
-3,955		NET CASH INFLOW/ (OUTFLOW) FROM INVESTING ACTIVITIES	-3,915	-3,913	..	-3,868	-3,867	-3,913		
		CASH FLOWS FROM FINANCING ACTIVITIES								
		Receipts								
10,000		Capital Injection from Government	0	0	-	0	0	0		
10,000		Financing Receipts	0	0	-	0	0	0		
10,000		NET CASH INFLOW/ (OUTFLOW) FROM FINANCING ACTIVITIES	0	0	-	0	0	0		
40,125		NET INCREASE/ (DECREASE) IN CASH HELD	30,570	19,599	-36	26,562	29,477	52,529		
211,929		CASH AT BEGINNING OF REPORTING PERIOD	209,509	240,079	15	259,678	286,240	315,717		
252,054		CASH AT THE END OF THE REPORTING PERIOD	240,079	259,678	8	286,240	315,717	368,246		

ACT Insurance Authority
Statement of Changes in Equity
    Budget			Est.Outcome	    Planned		   Planned	   Planned	   Planned		
as at 30/6/11			as at 30/6/11	as at 30/6/12		as at 30/6/13	as at 30/6/14	as at 30/6/15		
   $'000			   $'000	     $'000	    %	    $'000	    $'000	    $'000		
		Opening Equity								
13,261		Opening Accumulated Funds	1,426	3,594	152	5,967	5,296	5,562		
13,261		Balance at the Start of the Reporting Period	1,426	3,594	152	5,967	5,296	5,562		
		Comprehensive Income								
-2,604		Operating Result for the Period	2,168	2,373	9	-671	266	891		
-2,604		Total Comprehensive Income	2,168	2,373	9	-671	266	891		
0		Total Movement In Reserves	0	0	-	0	0	0		
		Transactions Involving Owners Affecting Accumulated Funds								
10,000		Capital Injections	0	0	-	0	0	0		
10,000		Total Transactions Involving Owners Affecting Accumulated Funds	0	0	-	0	0	0		
		Closing Equity								
20,657		Closing Accumulated Funds	3,594	5,967	66	5,296	5,562	6,453		
20,657		Balance at the End of the Reporting Period	3,594	5,967	66	5,296	5,562	6,453		

Notes to the Budget Statements
Significant variations are as follows:
Operating Statement
•	user charges - ACT Government:  the increase of $3.611 million in the 2011‑12 Budget from the 2010‑11 estimated outcome is due to an increase in the annual insurance premiums charged to agencies.  The premiums recognise a slight increase in the net expected cost of future claims, predominantly in the medical malpractice class.
•	interest:  the increase of $2.519 million in the 2010‑11 estimated outcome from the original budget and the increase of $0.845 million in the 2011-12 Budget from the 2010‑11 estimated outcome reflects higher than anticipated interest rates, and higher investment deposit levels.
•	other revenue:  the increase of $4.976 million in the 2010‑11 estimated outcome from the original budget and the decrease of $4.736 million in the 2011‑12 Budget from the 2010‑11 estimated outcome is due primarily to movements in expected reinsurance recoveries due to higher than expected storm damage.
•	other expenses:
–	the increase of $2.655 million in the 2010‑11 estimated outcome from the original budget mainly reflects higher than anticipated claims costs as a result of property damage from storms in late 2010 and the increasing cost of medical malpractice claims; and
–	the decrease of $0.593 million in the 2011‑12 Budget from the 2010‑11 estimated outcome recognises a decrease in the net expected cost of future claims, especially those arising from property.
Balance Sheet
•	cash and cash equivalents:
–	the decrease of $11.975 million in the 2010‑11 estimated outcome from the original budget is due primarily to higher than anticipated payments at 30 June 2010 ($2.4 million), higher claim payments during the 2010-11 period ($5.3 million), and the removal of the capital injection ($10 million).  This is offset by the decreased cost of reinsurance ($1.8 million), increased interest receipts ($2.5 million) and reinsurance recoveries ($1.5 million); and
–	the increase of $19.599 million in the 2011‑12 Budget from the 2010‑11 estimated outcome is primarily due to the continued building of investment assets in order to meet future claims.
•	receivables current:  the increase of $4.702 million in the 2010‑11 estimated outcome from the original budget and the decrease of $1.770 million in the 2011‑12 Budget from the 2010‑11 estimated outcome reflects an increase in reinsurance recoveries in 2010-11 due to storm damage.
•	other current and non current assets:  the increase of $0.597 million current and $0.328 million non current assets in the 2010‑11 estimated outcome from the original budget is due to prepayment of contract works insurance.
•	receivables non current:  the decrease of $67.698 million in the 2010‑11 estimated outcome from the original budget recognises movement in the provision for reinsurance recoveries associated with changes in both bushfire and ordinary claims liabilities.
•	investments non current:  the increase of $3.656 million in the 2010‑11 estimated outcome from the original budget and the decrease of $2.507 million in the 2011‑12 Budget from the 2010‑11 estimated outcome reflects the movement of funds between short term and longer term investment structures.
•	payables current:  
–	the increase of $6.145 million in the 2010‑11 estimated outcome from the original budget reflects the movement of claims from non-current to current due to changing assumptions around claim settlement times; and
–	the increase of $11.224 million in the 2011‑12 Budget from the 2010‑11 estimated outcome reflects higher than anticipated claims liabilities due to growth in large claims, particularly in medical malpractice.
•	other current liabilities:  the increase of $0.597 million in the 2010‑11 estimated outcome from the original budget is due to premiums received in advance for contract works insurance.
•	employee benefits current and non current:  the increase of $0.152  million current and decrease of $0.151 million non current in the 2010‑11 estimated outcome from the original budget is due to the movement of long service leave from non current to current liabilities.
•	payables non current:
–	the decrease of $60.069 million in the 2010‑11 estimated outcome from the original budget reflects movement in the provision for claims liability associated with changes in bushfire reserves; and
–	the increase of $1.644 million in the 2011‑12 Budget from the 2010‑11 estimated outcome reflects the anticipated growth in the cost of future claims.
Cash Flow Statement
•	capital injection from government:  the decrease of $10 million in the 2010‑11 estimated outcome from the original budget is due to additional funds not being required in 2010‑11 as a result of an improved cash position.
Statement of Changes in Equity
Variances in the statement are explained in the notes above.